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TMI Blog1960 (7) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for our consideration is whether the claim is barred by time or not. 2. The petition for winding up was presented on the 21st of April. 1952 and the Company was ordered to be wound up by an order of this Court on the 23rd of September, 1953. It is admitted on all sides that on the date the winding up petition was filed, the debt was within limitation and was, therefore, recoverable by means of a civil suit. The debt became barred during the period which expired between the filing of the application and the order of winding up. The question, therefore, is whether a provable debt is one which is provable on the date on which the winding up order is made or on the date when the application for winding up is made. The learned Judge has taken the view that the date of the winding up petition is not the relevant date. He has come to this conclusion for a number of reasons which he has stated in his judgment. He says, in the first place, that there is no bar against the presentation of a plaint or the institution of other proceedings against a company in respect of which a petition for liquidation has 'been made until the' winding up order is made. He goes on to say: " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Presidency Towns Insolvency Act, as the case may happen to be, may with advantage apply to the case which is being considered under the Companies Act, Section 168 of the Companies Act provides: "A winding up of a company by the Courts shall be deemed to commence at the time of the presentation of the petition for the winding up." This is analogous to the provisions of Section 28(7) of the Provincial Insolvency Act which are in the following terms: "An order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made." The provisions of Section 171 of the Companies Act are somewhat similar to the provisions of Section 28(2) of the Provincial Insolvency Act. Section 171 of the Companies Act places an embargo On certain types of proceedings after the winding up order is made. Similarly, under the Provincial Insolvency Act a similar embargo is placed on legal proceedings when an order of adjudication has-been made. One other section of the Companies Act may be referred to before discussing the question of limitation on merits. This is section 167 which reads: "An order for winding up a compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt held that the debt was within time and was provable. The Bombay High Court came to a similar decision in Byramji Bomanji v. Official Assignee, Bombay AIR 1936 Bom 130. The Bombay High Court was, in that case, applying the provisions of the Presidency Towns Insolvency Act, and the provision in that Act was to the effect that the order of adjudication relates back to the act of insolvency. While considering the question of limitation, the learned Judges observed: "Under Section 17 and Section 51, Presidency Towns Insolvency Act, the insolvency commences on the commission of the act of insolvency, and at that date the property of the insolvent vests in the Official Assignee, whose duty it is to administer it, and distribute it amongst the creditors who prove their debts. As from that date the Indian Limitation Act has no application, and the relationship of debtor and creditor ceases to exist.'' 7. The learned Judges derived assistance from an observation of the Lord Chancellor of England in Ex Parte Ross; In the matter of Coles (1827) 2 G&J 330: "Whatever may be the technical objection, the effect of the commission clearly is to vest the property in the assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim for the past salary from 1-7-1939 to 30-6-1943 would be barred by limitation even if the period of limitation be considered as six years under Art. 116 of the Limitation Act." 8. This case seems to me on all fours with the case before us, and the Allahabad High Court held that for the purposes of limitation the date when the application for winding up is made is to be considered the date when the order for winding up is made. This is, in effect, what Section 168 of the Companies Act provides. 9. On the other side Mr. Bhagirath Das relied upon the observations of the Lahore High Court in Hem Raj v. Krishan Lal AIR 1928 Lah 361. This was a case in which the provisions of Section 53 of the Provincial Insolvency Act were being considered by the Lahore High Court. The learned Judges came to the conclusion that the provisions of Section 53 were quite definite and admitted of no ambiguity. There could be no question of modifying these provisions by the provisions of Section 28(7). The learned Judges also drew attention to the provisions of Section 54 which deals with a somewhat similar matter. Similarly, in Magandas Bhukandas v. Bhalchandra Ramrao AIR 1954 Bom 436, the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect to the provisions of Section 168 in the matter of proving debts because he took the view that the law of limitation is a complete law by itself, and once limitation begins to run, no extraneous circumstance should be allowed to affect it. He observed: "It seems to be logical, that in the absence of any specific provisions, the determination of period of limitation cannot depend upon an extraneous circumstance, whether the winding up order is going to be passed on a petition, or, on the doubtful fact, whether the petition is going to be pursued or withdrawn". Under the Insolvency law and also under the Companies Act the order of adjudication or the order of winding up is an extraneous circumstance which affects the question of limitation. Under both laws the final order dates back to the filing of the original petition. This is not a legal fiction but the result of a specific provision of law and must be given full effect to. There is nothing extraordinary or questionable in the fact that limitation is extended by virtue of Section 28(7) in the case of insolvency law and Section 168 in the case of company law. The creditor may well take the risk to pursue his r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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